How the Next iPhone Could Finally Kill the Credit Card

[steve2470]

http://www.wired.com/2014/09/iphone-credit-card/

Remember when 3G was such a big deal that Apple named its new iPhone after what was then the new standard in mobile data transmission? The iPhone 3G, introduced in 2008, was the second iteration of the pioneering smartphone, and in a way the name was as much gloating as it was tribute. When cellular data mostly meant sending crude videos and maybe a song over the network, the old standard was good enough. But the radical new potential for connected mobile computing unleashed by the iPhone meant users would go with whichever carrier could move the most data the fastest. Apple forced the telecoms to up their games, and the competition has yet to cease.

Meanwhile, another kind of network has stagnated. Despite the proliferation of mobile payments companies, from startups like Square to a mobile-revamped PayPal, credit cards remain the standard for paying in-person and online. The money may move digitally, at least after the analog swipe of the card, but it’s still along the same old networks, a kind of parallel internet built to handle credit cards long before the web, much less the iPhone, existed.

But if, as predicted, the next-generation iPhone includes a chip that makes the device scannable at checkout counters, Apple could catalyze a transformation in how money moves that is at least as substantial as the improvements in how data moves that Cupertino forced upon the telecom industry. At first, an iPhone wallet likely would act as a surrogate for credit cards, a way to store the data of multiple cards but using the phone as the way to transfer that data instead of a swipe. But over time, the point of holding onto any of those cards, which become digital abstractions once they’re on the phone, likely will fall away. Instead, for all anyone with an iPhone is concerned, the way to pay will be Apple.

A Better Experience

The subject of Apple’s unique power to change the way payments work came up in a conversation I had yesterday with the co-founder of Dwolla, a Des Moines, Iowa, startup building an internet-based alternative to the existing credit card network standards with the aim of moving money in real time. Send a dollar, get a dollar, the way the internet works. The five-year-old company counts among its users the state of Iowa, which accepts several kinds of tax payments via Dwolla.

[hobbit709]

1. I'll do without my credit cards before I buy an iPOS.

[Orrex]

2. Replacing a free plastic card with a $500 gadget makes a great deal of sense

Where do I sign up?

[Johonny]

3. Apple could catalyze a transformation in how money moves

Yes, from your bank account to a hackers bank account with no middle man. Thanks apple. They can't protect their photos and they want me to trust them with my credit card numbers. iL O L

[enlightenment]

5. I would 'rec' this post if I could.

Thanks.

[librechik]

4. so now we have to carry an electronic brick no one can afford oh and monthly service charges too!

or be stranded with no access to our cash? Hey this sounds like a real breakthrough for corporate America...

[tridim]

6. At which point your entire bank account becomes available to hackers...

And also to common thieves who now see your iPhone as a big roll of free cash.

[steve2470]

7. my comment

1- I don't want an Iphone, period, so that's a deal-breaker.
2- Even if I had one, I don't trust Apple with my secure data or my bank account or credit card accounts.
3- As tridim said above, steal your Iphone, get $$$$.

I think this is a very hard sell for Apple.

[FSogol]

8. The same week Jennifer Lawrence's nude pics are stolen from the cloud, Apple wants us to move our

money and financial security to the cloud!

[yeoman6987]

13. I have an IPhone and two weeks ago I

Might have thought ok, at least see how this would work.....today. No way. Timing is horrible for this. I don't know why they could not wait six months to release this story. Their marketing failed big time.

[FSogol]

15. Agreed. As a company, they are kind of tone deaf. Too much preaching to the converted,

I suspect.

[JustAnotherGen]

9. It's not going to happen

We want chipped cards in America first. And well - a mobile wallet is a mobile wallet -

And well -

I won't buy an iPhone until they are the ONLY option for me. I see where Hello Motoooo! is moving their final production into the US - and that's one step away from opening full blown facilities. When I see Apple at least allowing the devices to be repaired in the US by trained techs - then we can talk.

Today - apple demands that the wireless retailers ship them back to China. I don't know of a single wireless retailer - including my own company - that doesn't have a full blown within the US facility that can identify defect issues and refurb.

[PoliticAverse]

10. Future headline: "Person arrested for non-payment due to dead phone battery". n/t

Last edited Fri Sep 5, 2014, 11:36 AM - Edit history (1)

[GeorgeGist]

11. Apple's previous expertise in moving money ...

is limited to offshore accounts.

[Coventina]

12. I don't have a smart phone, let alone an iPhone, and I don't plan on getting one anytime soon.

[MuseRider]

14. My Samsung does that now with an app BUT

I stopped using that when I found out there was a $2.00 charge each time I did. It was very convenient and done through American Express. Program was called ISIS, now SoftCard, and I tried it. You can put in all your cards (I did not) and you have to put the money in so I put in a tiny bit and used it up and then decided it was too risky. THEN I found out about the $2.00, a fee that was mentioned somewhere in that huge list of things I scanned over like a dope and did not read very well. Enough of that.

At least if you did not keep your other card info on it all that a person who stole your phone could get was the little money (or a lot if you chose to add a lot) in that one particular account if they could break your password.

Still, not worth it. I am not THAT busy nor do I use a card that often to actually need this.

Apple should maybe rethink this, especially after the cloud hacks.

[PoliticAverse]

17. One of the reasons bitcoin has become popular is that there are no fees involved for making payments

[brachism]

16. Sounds great, but

But if, as predicted, the next-generation iPhone includes a chip that makes the device scannable at checkout counters, Apple could catalyze a transformation in how money moves that is at least as substantial as the improvements in how data moves that Cupertino forced upon the telecom industry. At first, an iPhone wallet likely would act as a surrogate for credit cards, a way to store the data of multiple cards but using the phone as the way to transfer that data instead of a swipe. But over time, the point of holding onto any of those cards, which become digital abstractions once they’re on the phone, likely will fall away. Instead, for all anyone with an iPhone is concerned, the way to pay will be Apple.

I’ve heard a number of people talking about this as if it was some new cutting-edge revolutionary technology that Apple is pioneering and that it will change all our lives.

Near Field Communications (NFC) has been incorporated in a number of devices including Samsung’s Galaxy line since 2011. This includes the S5 (April 2014), S4 (March 2013), S3 (May 2012), S2 (December 2011) and the Galaxy Nexus (October 2011.)

There are many reasons why this hasn't become the de-facto standard method of payment. I'm not a phone-geek, but as I recall Apple didn't want to support NFC, the wireless technology most linked with mobile payment. Insteads they pursued developing their own solution around things like iBeacon. As I see it Apple is late to the game in this area. That said, the inclusion of NFC in their upcoming devices will certainly add momentum to move to mobile payments.

[951-Riverside]

18. How about I get rid of both and just save the money?

Lets say iPhone is $400 and service is $80 a month, that is $300 + $960 a year = $1,360. Lets not forget about the APR fees if the iphone is purchased with a credit card.

Do I really need to spend that amount of money just to take selfies, update facebook and get the latest packaged tweets from Sen Whatshisface or Congress Person Whatshername?

[backscatter712]

19. Google's beaten them to it.

My Nexus 4, and many other Android smartphones, have NFC technology in them, which lets people use them in place of a credit card, at stores that have NFC-enabled credit-card machines.

[frylock]

21. but what about that awesome new 4.7" screen?

like the one that I've been rocking on my S3 for 2 years now.

[frylock]

20. it's as if Google Wallet never existed..

this is some groundbreaking shit, here.

[MrScorpio]

22. I paid off all of my credit cards and cut them up six years ago

Haven't looked back since.

[JCMach1]

23. we are so behind it isn't even funny. Kenya's economy runs on mPesa

http://en.wikipedia.org/wiki/M-Pesa